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State funding gaps: Students who need the most continue to get the least

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Publication date: Oct 29, 2003

(Washington, DC)  The Education Trust released today a new report documenting large funding gaps between high- and low-poverty and -minority districts in many states. The study reveals that, in most states, school districts that educate the greatest number of low-income and minority students receive substantially less state and local money per student than districts with the fewest low-income and minority students.

“In too many states, we see yet again that the very students who need the most, get the least,” said Kevin Carey, Senior Policy Analyst and author of the report, upon releasing the study. ”At a time when schools, districts and states are rightly focusing on closing the achievement gap separating low-income and minority students from other students, states can and must do more to close these funding gaps.”

According to Carey, a school funding expert, “The good news is that when looking at funding gaps over time, most states  34 of 49  have made some progress in closing those gaps. Its true that this progress came during a high water mark for state budgets, while the current state budget situation is more challenging. Even so, there is much that states can and must do right now to close these gaps.”

”Let’s be clear,” said Kati Haycock, Director of the Education Trust. ”Congress and the President need to do their part by fully funding No Child Left Behind. But states are primarily responsible for education funding, and they have to do their part, too. In an era of high standards for all students, not just some, directing fewer state and local dollars to districts with the greatest need is simply unconscionable.”

Greater depth of analysis than ever before

This years report offers a 3-fold look at how these gaps play out in every state  from the most minimal cost adjustments to the most currently accepted additional adjustments for educating low-income students. (NOTE: Washington, D.C. and Hawaii are single districts, and are therefore not included in the analyses). All dollar figures in this report have been adjusted for local cost differences, and for the cost of educating students with disabilities using standard federal formulas (see Technical Appendix).

Without even taking into account the additional costs of educating low-income students, far too many states are shortchanging their neediest districts.

Almost all school funding analyses account for the additional costs of educating students living in poverty. But even before making any such adjustments, the report finds that many states actually provide fewer state and local dollars to school districts with the highest poverty rates compared to the districts with the lowest poverty rates. Even more states shortchange their highest minority districts.

In 22 of 49 states studied, the quarter of districts educating the greatest number of poor students receive less state and local money per student than the quarter of districts educating the fewest poor students (see Table 1).

In 28 of 48 states studied, districts enrolling the highest proportions of minority students receive fewer state and local education dollars per student than districts enrolling the lowest percentages of minority students (see Table 1).

When making the most modest of adjustments for the cost of educating low-income students, it gets worse…

Most analyses of education funding, including reports by the GAO and NCES, attempt to account for the extra costs of educating students living in poverty. The most conservative and widely used adjustment for the additional costs of educating low-income students is 20%. In doing such an analysis, the report finds that the picture for districts serving low-income and minority students gets even worse (see Table 2, column 3).

In 30 of 49 states studied, the quarter of districts educating the greatest number of poor students receive less in cost adjusted state and local money per student than the quarter of districts educating the fewest poor students.

Of those 30 states, 7 have per student funding gaps of over $1,000.

Over time, the funding gap has been shrinking nationally and in many states, but has actually grown in others. Using the same 20% cost adjustment described above, the report finds that:

Nationally, the per student funding gap between the quarter of districts educating the greatest number of poor students and the quarter of districts educating the fewest poor students narrowed slightly from 1997 to 2001, from $1,139 to $1,020  a narrowing of $119 per student.

34 of 47 states followed the national trend and REDUCED their funding gaps between 1997 and 2001 (see Table 2, column 4).

Notably, 12 of those states decreased their per student funding gaps by $500 or more.

Disturbingly, funding gaps actually GREW in 13 of 47 states during that same period.

7 of those states increased their cost-adjusted per student funding gaps by $200 or more.

A handful of states are at the “frontier” when it comes to striving for more equitable funding policies, but most others still lag behind.

Federal law, practice in the field, and academic research have begun to agree that a 20% adjustment is inadequate to offer equal educational opportunities to low-income youngsters. In fact, a 40% adjustment is quickly replacing the 20% adjustment as the industry standard.

When applying a 40% adjustment for the cost of educating low-income students, the report finds that a handful of states appear to be working toward more equitable funding policies, but most others still lag far behind.

The good news is, 10 of 49 states have no gap at all  that is, they provide more resources to higher-poverty districts (see Table 3).

The bad news is, in 39 of 49 states studied, the opposite is true. In those states, the quarter of districts educating the greatest number of poor students receive fewer state and local dollars per student than the quarter of districts educating the fewest poor students.

Disturbingly, 10 of those 39 states have funding gaps of more than $1,000 per student.

The picture is just as bleak for districts serving the most minority students.

In 37 of 48 states studied, districts enrolling the highest proportions of minority students receive fewer state and local education dollars per student than districts enrolling the lowest percentages of minority students (see Table 4).

12 of those states have funding gaps of more than $1,000 per student.

”Sadly, no matter how you look at the numbers, low-income and minority students continue to get less than their fair share of funding,” said Haycock.

These per-student funding gaps add up (see chart on p.10).

These gaps have very real consequences for the districts educating the most low-income and minority children. In Illinois, for example  using the 40% adjustment  the $2,384 per student difference in cost-adjusted dollars by poverty enrollment translates into a whopping $953,600 difference between high- and low-poverty elementary schools of the same size (400 students each). That amount would easily be enough for the high-poverty school to compete with elite suburban schools for the most qualified teachers and also provide extra instructional time for students who are behind.

“The good news is, since 1997, the gap between high- and low-poverty districts lessened in many states. But overall, these data indicate clearly that we must urge states to do more to close their funding gaps, if we are truly interested in helping high-poverty and high-minority schools help their students,” Haycock continued.

Haycock also cautioned, “That said, anyone who uses these state funding gaps to excuse the indefensible achievement gaps in public education is just as misguided as the critics who claim money doesn’t matter. Money matters a lot. But there are many non-monetary ways we shortchange poor and minority students, including assigning them to less rigorous courses and holding them to lower standards. We need to work on all fronts to ensure poor and minority students get the education they deserve.”

What States Can Do (pp. 10-14)

States establish the systems that fund public schools, and thus it is states that must act to close these gaps. The most common approaches are for states to reduce reliance on local property taxes by assuming a greater share of overall school funding and provide additional targeted funding for high poverty districts. (See Table 5 on p. 11 for state-by-state rankings on these effort measures.)

”Every state provides some state resources to K-12 education, and most states provide some additional funding to high-poverty districts,” noted Carey. ”The problem is that many don’t do enough to make up for what can often be huge resource differences between poor and wealthy communities.”

”Yes, these are difficult state budget times,” Carey concluded. “But there are things states can do now to take steps to remedy these tremendous inequities, by targeting state resources to high-need districts and schools.”